Cross-border tax terms — L
5 terms beginning with L, each defined at mechanism level.
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Each entry answers two questions — what the term picks out, and what changes once it applies. Neither answer needs a number, and a number in a definition tends to outlive its accuracy.
Terminology is where cross-border risk hides. The rate is visible and gets checked; the classification is invisible and does not, which is why the classification is what usually goes wrong. So every entry is written in three parts: the meaning, the point at which it costs something, and the filings on this site that it governs.
The question worth asking is not what a term like this means but whether it applies to you this year. That is a computation on your facts. Every page here carries the name of the person who reviewed it and the date they did.
- Limitation on benefits — A treaty eligibility test written to deny benefits to conduit entities, applied through ownership, listing, active-business and base-erosion conditions.
- Lower deduction certificate — An Indian certificate authorising deduction at a reduced rate, applied for before the payment and the practical answer to a deduction computed on gross consideration.
- Local file — The transfer-pricing document covering one entity's controlled transactions, functional analysis, method and comparables.
- Liaison office — An Indian form of presence that may not earn income.
- LRS — India's liberalised remittance scheme, permitting resident individuals to remit funds abroad within an annual limit for declared purposes.
What the L entries have in common
5 terms begin with L. The term below is defined in full on its own page, alongside the filings it governs and the fee for dealing with them. Three to start with: Limitation on benefits, Lower deduction certificate and Local file.
Nearby letters
J — 2 terms · M — 7 terms. The full A–Z lists all 297 terms in one place.
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Cross-border situations we are engaged for
Ownership and base erosion conditions tested before a treaty claim was made
A group intended to claim a reduced rate on an intra group payment, and the recipient sat in a treaty country with little activity of its own. The work consisted of tracing the ownership chain to its ultimate holders, checking which of them would qualify under the treaty in their own right, and measuring the deductible payments made out to persons outside the treaty. The engagement produced a written conclusion that the claim was supportable on the ownership route, the evidence file standing behind it, and a note of the payment pattern that would put the position at risk if it changed.
Lower deduction certificate obtained before an Indian property completion
A seller resident outside India had a completion date fixed and the buyer was preparing to deduct on the full consideration. The work consisted of computing the expected liability on the gain, assembling the cost and improvement evidence supporting it, and making the certificate application far enough ahead for the certificate to be in the buyer's hands on the day. The engagement produced a certificate authorising deduction at the reduced rate, a buyer who deducted against it, and a seller who received the balance of the price at completion rather than waiting out a refund cycle.
Active business route documented for an operating subsidiary
A subsidiary receiving royalties was refused the treaty rate on first review because it looked passive on paper. The work consisted of setting out what the company actually did, whether that activity was connected to the income in question rather than merely present in the same entity, and whether it was substantial measured against the activity generating the royalty. The engagement produced a description of the business supported by employment records, customer contracts and premises documentation, and a claim resubmitted on the active business condition with that material attached to it.
Conduit structure reviewed and the treaty claim abandoned
A structure had been built on the assumption that a treaty rate would apply, and on review it met none of the conditions the limitation on benefits article sets. The work consisted of testing each route in turn, ownership, listing, active business and base erosion, and recording why each of them failed. The engagement produced a decision not to make the claim, payments made at the domestic rate instead, and a written note of what a restructuring would have to change to reach the treaty at all. Saying so before the claim avoided a position that could not have been defended.
Listing condition evidenced for a group parent
The claimant's route to treaty benefits ran through its parent being listed with its shares regularly traded, and the payer's advisers wanted that shown rather than asserted. The work consisted of obtaining the exchange documentation, establishing that the trading met the condition as the article describes it rather than in a general sense, and tracing ownership from the parent down to the entity receiving the payment. The engagement produced a signed statement of the position with its supporting material, accepted by the payer, and a file the group now refreshes at the start of each year.
Deduction taken on gross consideration and recovered through the return
A payment had already been made with deduction computed on the whole amount, and no certificate had been applied for. That route was closed. The work consisted of computing the actual liability on the income element, preparing the return that claims the difference, and assembling the deduction certificates and remittance evidence the claim depends on. The engagement produced a filed return with the refund claimed, a reconciliation of what had been withheld against what was owed, and a timetable agreed with the client so the next payment is covered by a certificate instead.
A Secondment Whose Paperwork Decided the Tax
Who employs, who directs and who bears the cost are the facts a treaty article turns on, and an assignment letter is where they are recorded. Drafting it with the tax position in view prevents an argument later.
Read how this one runsFifteen Per Cent Held Back From a Fee for Services in Canada
A payer must withhold from fees paid to a non-resident for services rendered in Canada, whether or not any tax is ultimately owed. A waiver applied for before the work is invoiced avoids the withholding; after it, the money comes back through a return.
Read how this one runsAll case studies — every published engagement in one place.
Core International & Cross-Border Tax Services
Strategy and compliance for income, assets and families spread across borders.
Industries & Client Types We Serve Worldwide
- Foreign VAT / GST / sales tax registrations
- Marketplace withholding reviews
- Inventory nexus & PE analysis
- Multi-currency books reconciled
- Cross-border revenue sourcing & withholding
- IP structuring with real substance
- Equity for cross-border teams
- U.S. expansion: entity & PE setup
- Reg 105 / 102 waivers
- Permanent establishment risk
- Partner mobility planning
- Cross-border withholding recovery
Foreign property income and sales are taxed in both countries by default; Section 216, FIRPTA and treaty credits are the standing toolkit.
Property is taxed where it sits, which is the one rule no treaty overrides. What the treaty does decide is the credit, the rate on the rent and what happens on the sale — and the clearance certificate on a disposition is applied for before closing, not after the buyer has already held the money back.
- Section 216 rental returns
- FIRPTA withholding recovery
- Section 116 clearance
- Treaty credit optimization
- Transfer pricing documentation (s.247)
- Customs value vs transfer price
- Foreign affiliate reporting (T1134)
- Country-by-country reporting
- Reg 105 & U.S. CWA agreements
- Multi-state & country calendars
- Touring income allocation
- Royalty & image-rights withholding
- Residency analysis before moving
- Employer payroll exposure
- Totalization & social security
- Foreign tax credits
- Treaty access & PPT reviews
- FAPI & surplus computations
- Withholding-efficient routing
- Governance & substance
